Questions on Pricing

[hidepounder]

A successful saddlemaker recently told me "it doesn't take much of a salesman to sell a $10 bill for $5!" He said "if you're going to do the work you need to get paid for it". That's pretty hard to argue with! I'm certainly guilty of not being much of a salesman, and I'm probably in good company.

Over the years my approach to selling my work has changed a little. Now, I try to sell my ART. I think that is a little different than selling a product. What we do is no different than selling a painting or a sculpture. I think that helps me keep a different perspective. The better the art, the higher the price and that means that name recognition is a pretty big deal when it comes to price!

On almost every piece I do I create a worksheet that I work from. I just made it using MS Works or Excell, I don't remember which. It has four basic parts:

FIRST is all my contact information, shipping address, telephone numbers, quotes, etc.

SECOND is a place where I record everything the customer wants, and any important changes or instructions due to subsequent conversations.

THIRD is an area where I record every piece material that goes into the project...and I mean everything, from rivets and chicago screws, leather, glue, dye, etc., etc. When I extend the cost of materials I also account for waste and expendables.

FOURTH is a time log. It's the hardest to keep up with, but I record every minute that I'm working on that project. I do not include down time such as drying time, my attitude is that I should be working on other projects during those times.

When my project is finished, it is easy to figure out exactly what my costs are and they are usually more than I anticipated. It's pretty tough to come up with a sales price when you don't know what your real costs are! I've found these worksheets to be invaluable for figuring future projects as well!

When it comes to a labor rate, I struggle. I think this is where you really have to be honest when comparing yourself with the competition! Are you producing a superior, equal or lesser product? Do you have the name recognition required to command a higher price? My customers come to me because of my reputation...however, I still have to temper my prices, because I'm not as well known as some of my competition. It's a real battle! You have to take a little less sometimes in order for your work to be seen. Building a reputation is everything! However, the more you sell, the more you can demand because of your exposure and reputation.

Just don't sell that $10 bill for $5 bucks!

Bob

[Bree]

Hey Bree...got it!

Maybe not a fair test, as I remembered seeing this in the past, so I already knew the lines had to be extra long.

Reminds me of somthing that happened to me when I was about 5 yrs old. A bunch of us kids crawled into the storage shed of the town butcher. There were stacks of chicken cages in there, and a couple of the older boys tricked us into getting into them. Well, they slammed the doors shut, and told us that the butcher would find us in there in the morning and butcher us. We were screaming and crying after they left us, but one by one we all escaped. Some of the doors weren't even latched, mine included. When I finally just tried pushing it, the door opened right up.

So what did I do for my still trapped friends? Nothing. I ran like hell and never looked back. I just kept my mouth shut and didn't eat any sausage for the next couple weeks.

So, that's my experience about escaping from a self imposed limitation.

Doug

You hit paydirt. We are our biggest enemy when it comes to price and value. We cage ourselves even though the doors open right up if you just push on them a little. And like Bob says just don't sell $10 bills for $5!!

[RustyMelton]

A successful saddlemaker recently told me "it doesn't take much of a salesman to sell a $10 bill for $5!" He said "if you're going to do the work you need to get paid for it". That's pretty hard to argue with! I'm certainly guilty of not being much of a salesman, and I'm probably in good company.

Over the years my approach to selling my work has changed a little. Now, I try to sell my ART. I think that is a little different than selling a product. What we do is no different than selling a painting or a sculpture. I think that helps me keep a different perspective. The better the art, the higher the price and that means that name recognition is a pretty big deal when it comes to price!

On almost every piece I do I create a worksheet that I work from. I just made it using MS Works or Excell, I don't remember which. It has four basic parts:

FIRST is all my contact information, shipping address, telephone numbers, quotes, etc.

SECOND is a place where I record everything the customer wants, and any important changes or instructions due to subsequent conversations.

THIRD is an area where I record every piece material that goes into the project...and I mean everything, from rivets and chicago screws, leather, glue, dye, etc., etc. When I extend the cost of materials I also account for waste and expendables.

FOURTH is a time log. It's the hardest to keep up with, but I record every minute that I'm working on that project. I do not include down time such as drying time, my attitude is that I should be working on other projects during those times.

When my project is finished, it is easy to figure out exactly what my costs are and they are usually more than I anticipated. It's pretty tough to come up with a sales price when you don't know what your real costs are! I've found these worksheets to be invaluable for figuring future projects as well!

When it comes to a labor rate, I struggle. I think this is where you really have to be honest when comparing yourself with the competition! Are you producing a superior, equal or lesser product? Do you have the name recognition required to command a higher price? My customers come to me because of my reputation...however, I still have to temper my prices, because I'm not as well known as some of my competition. It's a real battle! You have to take a little less sometimes in order for your work to be seen. Building a reputation is everything! However, the more you sell, the more you can demand because of your exposure and reputation.

Just don't sell that $10 bill for $5 bucks!

Bob

Bob I'd say your a pretty good salesman because you make me want a rope can and I don't even own a rope, your stuff looks that good. Seriously though the list you made is great idea espescially for knowing the cost, I always forget about the waste.

[hidepounder]

Thanks for the kind words, Rusty. That worksheet really is valuable. If I ever get my computer back, I will post one....

Bob

[Daggrim]

Bob, wow, a tracking sheet is a great idea. I'm gonna make one this weekend.

Dag

[KatieG]

Pricing is something that I worry about as well.

I tend to have a niche - not many folks out there do my style in actual leather....but in order to sell to get a rep, I have to pack it all up and truck it to anime or scifi or comic conventions... which means affording travel, hotel, and table space. Haven't gone to a con yet, I'm a ruddy coward.

So far the only prices I have figured out are keyfobs ($5-15 depending on design...15 being ridiculously designed), and simple small flasks (simple anime/manga symbols. talking about 25-30 per flask. huzzah.)

As for time... I have no idea what my time is worth. To me, leatherworking is fun. Do I generally know how much time I spend on a project? Yes. My current piece, painting time for just the girl before the background is 4 hours. I wouldn't charge for drying times, since I can pick up another project and start or continue on it while the other piece dries (what am I, a lawyer?) or do something else (hey, we have to eat, too.).

I know I can carve out a quick manga-style piece of 2in x 3in in about 15 minutes, but that's the more simplistic shonen-type manga versus the more detailed shoujo-type manga.

The most I made working-working is like $8/hour. So what is my time worth? What is my husband's time worth, since he does the majority of the stitching and lacing for me? What are materials worth? When I'm paying almost $8 a square foot for the hide (I am in love love love with it.), and he's enamored of kangaroo lace for most projects.... that's kind of expensive.

At the moment we are going to be doing a tote bag for $100, so... here's to hoping that's fair, the client seems to think so.

My husband and I did a belt for $20 - the client said we undercharged... it was a simple black belt with the guy's current buckle. Really not difficult. (But it turn out awfully well for a simple thing. ^_^.)

So I'm with you guys; figuring out what to charge isn't easy.

Oh, and then there's trade....Like a bracer for beeswax. A dog collar for handmade soap.

Seriously, pricing is hard.. but I do like that suggestion - make em wince but go for the money.

We just set up an etsy account, so yeah. Here's to hopin'. Maybe this fall we'll get out to a con.

Sorry for rambling. >,<.

[Windom Leather]

I see that its been a bit for anyone to reply to this thread but I thought I would put in my thoughts... I too am having a hell of a time with pricing my work. After reading this thread I picked up alot of points to try. Thanks to all, I have learned so much from this forum in the short time I have been here. My wife has been in the horse industry all of her life and I married into it. So the going price for tack and accessories I have not much of an idea what the goin prices are. So i always ask her, and she will say I can get this or that for this much through this place ect. and I try to price close to that.

What I have realised is that stuff she can get for x price is all production stuff and I am hand crafting every part of what I make right down to hand stiching everything (cant afford a machine yet). Case in point about charge what you think its worth-- I have been setting up a table next to the pick up when we go to the playdays. Just tryin to get my name known to the horsey people in our area. The lady that runs one of the playday series has approached me to buy some spur straps for awards. I gave her a cut rate deal on them. When we went to the second one in the series she approached me to expand the order and add 5 bronc halters. I went home and aggonized over how much I should charge... Material cost not a problem to figure out, I used to do that in my sleep when I used to work in construction. But how much for my time? Whats a fair price that will cover my costs and still put a bit of profit in my pocket? I came up with $85 for a nylon halter with a hair-on nose band with the saddle clubs initials carved in a piece and sewn on. I went to her with the price and took one that I had made for my wife that had conchos on it. I was scared to death that she wasnt goin to accept the price, especially since she needed 5 of them. She said ok to the price but really liked the conchos instead and I blurted out $15 more each. She grabbed her check book!

My method is material cost plus how long do I think its going to take to make it at $30/hr. If it seems astronomical I will do some adjusting (might be the wrong thing to do) then compare to everyine else and see if im in the ball park. Its the only way I know how at the moment to come up with pricing.

So Im going to take alot of the ideas from this thread and start utilizing them and then stick to my guns. Handcrafted takes time to put the quality in it and thats what the customer is paying for and thats what you have to teach them! Thats something Ive learned from reading this thread.

Ok enough with my long windedness.

Edited July 29, 2009 by kwranch

[Daggrim]

kwranch,

Yeah, what you said. I really use the same method...materials+cost+show overhead, then if that seems way too high compared to other stuff out there, I adjust to where my gut is comfortable.

Doug

[yan]

I can't honestly tell you how much your work is actually worth, but as a customer (I am so far from being a professionnal...) I can tell you the rule I use when bying leather stuff:

under 10 $, If I like and I know it will take me more then 15 min to make I buy

under 20, If I really like and might use, I try to negociate ( but not seriusly)and buy

over 20 $:

How much will it cost me to get the material (so tandys cost +5$), how long will it take me to make a cheaper version (so about 5 to 10 time what a artist will need) at about 10$ a hours.

[Bree]

I see that its been a bit for anyone to reply to this thread but I thought I would put in my thoughts... I too am having a hell of a time with pricing my work. After reading this thread I picked up alot of points to try. Thanks to all, I have learned so much from this forum in the short time I have been here. My wife has been in the horse industry all of her life and I married into it. So the going price for tack and accessories I have not much of an idea what the goin prices are. So i always ask her, and she will say I can get this or that for this much through this place ect. and I try to price close to that.

What I have realised is that stuff she can get for x price is all production stuff and I am hand crafting every part of what I make right down to hand stiching everything (cant afford a machine yet). Case in point about charge what you think its worth-- I have been setting up a table next to the pick up when we go to the playdays. Just tryin to get my name known to the horsey people in our area. The lady that runs one of the playday series has approached me to buy some spur straps for awards. I gave her a cut rate deal on them. When we went to the second one in the series she approached me to expand the order and add 5 bronc halters. I went home and aggonized over how much I should charge... Material cost not a problem to figure out, I used to do that in my sleep when I used to work in construction. But how much for my time? Whats a fair price that will cover my costs and still put a bit of profit in my pocket? I came up with $85 for a nylon halter with a hair-on nose band with the saddle clubs initials carved in a piece and sewn on. I went to her with the price and took one that I had made for my wife that had conchos on it. I was scared to death that she wasnt goin to accept the price, especially since she needed 5 of them. She said ok to the price but really liked the conchos instead and I blurted out $15 more each. She grabbed her check book!

My method is material cost plus how long do I think its going to take to make it at $30/hr. If it seems astronomical I will do some adjusting (might be the wrong thing to do) then compare to everyine else and see if im in the ball park. Its the only way I know how at the moment to come up with pricing.

So Im going to take alot of the ideas from this thread and start utilizing them and then stick to my guns. Handcrafted takes time to put the quality in it and thats what the customer is paying for and thats what you have to teach them! Thats something Ive learned from reading this thread.

Ok enough with my long windedness.

Good job! Remember this... Once you start pricing on the cheap... it is VERY difficult to get your customers to accept your pricing on the premium end. You stereotype yourself. You make yourself a cheap commodity. It's hard to turn straw into gold.

It is much easier for a premium pricer to fall on bad times and have to part with something of high value for less. And that is a very easy sale to make. You can have exactly the same product at exactly the same price but the PERCEPTION of the value to the buyer can be determined by the normal pricing of the seller's other merchandise. It's not logical but it's true.

So since none of us are producing millions of units at the lowest possible cost... none of us should be pricing our wares at the lowest possible price on a daily basis. Custom work is PREMIUM work. Charge accordingly and make the customer believe that they get PREMIUM work from you no matter what they actually pay as a result of wheeling and dealing.

My $.02